Major Firm Closing Group Homes In State

Dispute over finances, quality of care leads firm to shut group homes.

A major player in the business of providing housing and health care to people with intellectual disabilities is leaving Connecticut, saying the state isn't paying enough to do a difficult, labor-intensive job in an industry characterized by sub-par wages and high turnover.

REM Connecticut also has been cited for lapses in nursing care and other services, and has been accused of over-billing the state by at least $879,000.

REM, which denies the billing accusation, was paid $11.6 million in fiscal year 2014 to manage 28 group homes and apartments for the Department of Developmental Services. It wasn't enough, the company says, and it had to operate at a financial loss to serve about 85 DDS clients. REM is a for-profit company in a field dominated by nonprofits, but the bottom line is the same, say other operators and industry lobbyists:

In an era of heightened public scrutiny of group-home staff and a large list of families waiting for openings in group homes and other programs, the lack of annual cost-of-living increases forces companies to operate on the very margins of their budgets, or beyond.

REM, part of a national company that operates in 36 states, says it is leaving only because of DDS' rate structure, and that the departure after 15 years "is a last resort."

But a fair number of group-home providers, large companies and small, have been able to function within the constraints. And there has been no shortage of interest from other operators in picking up where REM is leaving off — provided the rates will cover staff, training, supplies and other expenses, said Julia Wilcox of the Connecticut Association for Nonprofits.

REM's departure will be complete by the end of the year, and REM workers are still staffing group homes during the hand-off.

An industry source confirmed that about dozen operators have expressed interest in REM's sites, although DDS declined to discuss the selection process. The money that the operators receive is based on the needs of the clients. DDS establishes a budget for the annual care of each person. The more medically needy, the higher the individual budget – but also the more staff and specialized care the group-home operators must provide.

Given adequate funding, "there is absolutely the desire and capacity in the provider network" to take on new work, Wilcox said.

DDS spokeswoman Joan Barnish did say that several companies will be chosen to take over the homes that were managed solely by REM, and that no one company will have more than a few of the homes.

Ron Cretaro, executive director of the association for nonprofits, said many group-home workers haven't had a raise in five or more years, and that some companies have stayed afloat by cutting benefits. The development director of one large provider with a successful track record in Connecticut said the company couldn't stay in business without private donations to supplement state funding.

In a series last year on preventable deaths of developmentally disabled people in group homes and other facilities, The Courant reported on the high turnover of workers, a disparity in the quality of group homes across the state, and gaps in training, medical oversight, nursing care and other specialized services. After a group-home worker in East Hartford was caught on videotape abusing a client in July 2012, many members of the public wondered aloud about the hiring and screening of workers, and the supervision inside group homes. There have also been instances of a worker fired for sexual abuse or other transgressions being hired by another group-home operator.

Terrance Macy, the DDS commissioner, has said on several occasions over the past two years that he wants to see the emphasis shift from the classic group-home model to family-based services, in which a family or several families could receive the funding to hire caregivers and specialists.

But the demand by parents and relatives for well-run groups for their loved ones remains high. There are 686 people on a waiting list for immediate group-home placements or other services, and another 1,157 who are expected to need the placements or other services within the next two or more years. Vacancies in the homes are filled as soon as they open.

So REM is leaving an atmosphere of high demand, but precarious funding.

In a letter to REM Connecticut dated Sept. 19, DDS officials said the state would withhold about $879,000 from REM's 2015 funding for what the state called improper charges by the company.

Asked what DDS was prepared to do to recover the money since REM is leaving, Barnish said the department "is continuing to review prior-year expenditures and, until the reviews are complete, we will not comment on potential actions."

REM officials said they have been using the same accounting and auditing procedures for 15 years with no issues before now.

Paul Cataldo, executive director of REM Connecticut, said the company hasn't "received a request from DDS for a payback related to prior fiscal years, but we remain confident that we have consistently complied with state reimbursement rules."

Company officials acknowledged that REM was placed on "enhanced monitoring," or a heightened level of scrutiny by DDS, over lapses in nursing service one year ago. But the company said the matter was quickly addressed.

"While we had successfully served very complex individuals for many years, we experienced a brief period during which our nursing services did not meet either our own internal standards or the department's," said a statement issued by company spokeswoman Sarah Magazine.

She said REM tapped into expert services from the national company and partnered with a contract nursing service.

"We are confident that our collective efforts have resulted in significant improvements in the caliber of nursing services we provide," the statement said.

But Barnish said "enhanced-monitoring decisions are drawn from a broad overview of supports. Nursing is only one facet of a much larger support system."

Barnish said REM remains on enhanced monitoring, which means DDS case managers, financial experts and other personnel have been visiting REM group homes and apartments on a frequent basis, and are continuing to examine company operations.

Several state committees are working to reduce the DDS waiting list and help program providers cope with more than $15 million in additional cuts and Medicaid adjustments that are coming soon.

Wilcox, who is serving with two of the groups, said for years some group-home providers have received lower rates than others. She said one of the committees is trying to devise a way to equalize the rates, which would help some of the providers.